Concept: Moral Hazard

What happens when government intervention interferes with a society’s natural balance?

This CF&P Foundation’s Economics 101 video discusses the idea of “Moral Hazard”, which occurs when bad choices are subsidized.

This often happens when government intervention lets people take risks while having little or no skin in the game.

Housing policies, for instance, subsidized mortgages, thus enabling irresponsible borrowing and leading to bubbles and bailouts.

Politicians may be setting the stage for the next crisis with a too big to fail policy that will subsidize the biggest financial institutions.

Thanks to www.freedomandprosperity.org for the work.

Read more on the WIKI about the concept of Moral Hazard.

Then ask yourself, “How does this apply to ideas such as Government health care, Government run banks, Government run auto makers, and even Government financed science?”

Hat tip: The Hot Air

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